Measuring the effectiveness of blockchain smart contracts

Abstract

Blockchain smart contracts have quickly become a focal point of research and development. Their autonomous, decentralized, transparent and secure nature allows for enforcement of agreement between multiple parties, with no need for trust as a prerequisite and no intermediaries to facilitate the relationship. However, this shift in paradigm, the significant difference with conventional software, and a variety of decentralization specifics has made development of reliable and effective smart contracts extremely difficult. The tendency has been shown by the short, yet turbulent history of smart contracts, full of numerous attacks, exploits, thefts, and failures. In this paper, the authors address this by proposing a formal way to evaluate the effectiveness of smart contracts. They specify the factors that impact effectiveness. First, parameters that serve as the input to a specially constructed evaluation model are identified. Then, the algorithm used by the model to calculate the effectiveness is shown. The result of this process is a special output metric called Smart Contract Index of Effectiveness, which quantifies the level of potential risk to the effectiveness of a smart contract. Lastly, the authors validate the model by applying it to popular smart contracts and show that it correctly classifies them as effective or not. Direction for future development of the model and further specification of its scope and accuracy is also provided.